GM launches record share sale

Once-bankrupt General Motors sped toward one of the largest stock offerings in history and an end to the government's stint as the auto giant's top share holder.

The Detroit-based firm set a price of 33 dollars per share for a Thursday stock listing set to garner at least 20.1 billion dollars and start driving away from one and a half years of government control.

President Barack Obama said the initial public offering marked "a major milestone in the turnaround of not just an iconic company but the entire American auto industry."

In June 2009, the debt-laden company had been forced into government-backed bankruptcy as it borrowed close to 50 billion dollars from taxpayers to stay alive.

A car dealership in New York selling GM vehicles

The sale will see the government reduce it stake in the company by nearly half to 37 percent, making the US taxpayer at least 11.7 billion dollars in the process.

Obama, fresh from an election "shellacking" fueled -- in part -- by anger at big company bailouts, pointed to GM's resurgence as evidence his policies had worked.

"Supporting the American auto industry required tough decisions and shared sacrifices, but it helped save jobs, rescue an industry at the heart of America's manufacturing sector, and make it more competitive for the future," he said.

Although the final value of the sale may not be known for weeks, strong-demand clauses could send it beyond the current IPO record of 22.1 billion dollars set by the Agricultural Bank of China in July.

The sale is already well on target to beat the 19.7-billion-dollar listing of Visa in 2008 which is the current US record.

"All of us at GM are excited about this historic milestone," said GM chief financial officer Chris Liddell. "We are especially appreciative of those who stood by us through the toughest times."

Robert Schultz, an analyst with Standard & Poor's, said a successful IPO will encourage consumers who were "hesitant to engage with GM because of the bailout and public ownership."

"The purpose of the IPO is to begin to shift ownership of GM to the public from the three main shareholders: the US Treasury, the United Auto Workers union, and the Canadian government," he added in a client note.

Ahead of the sale the Canadian and Ontario governments had a 11.7 percent holding, and the United Auto Workers union's retiree health care trust fund owns a 19.93 percent stake.

The return of GM to the New York Stock Exchange after a near 18-month hiatus could also make it easier for the company to raise capital as it continues to address pension underfunding and shifts away from gas-guzzling sport utility vehicles (SUVs) toward greener, electric and fuel-efficient vehicles.

Investors from Asia to the United States to the Middle East had expressed interest in getting a piece of a firm that was once the biggest carmaker in the world.

GM's partner in China, Shanghai Automotive Industries Corp (SAIC), is said to be eyeing a one percent stake worth 500 million dollars.

The company was forced to delist after filing for bankruptcy protection on June 1, 2009 amid plummeting sales, high debt, union disputes and as recession-hit consumers became increasingly unable to secure loans.

source AFP

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